MH Deal Inside Daughters Roth IRA - Posted by John

Posted by John on June 08, 2006 at 13:27:52:

Thanks for the reply.

I’m going to call entrust and ask them but I was under the impression that anyone could partner with an IRA and benefit from it. What I “earned” from the partnership would be taxable income and claimed on my filing.

I’ve worked something out with the park that I get 2 free months to fix up with zero lot rent due and that once the trailer is occupied I get the 4th month free. So if I were to let the tenants pay it directly they’d benefit from the free lot rent for the 4th month. I tell them they pay me for the 1st 6 months and if they pay on time then I may decide to let them pay the park directly.

MH Deal Inside Daughters Roth IRA - Posted by John

Posted by John on June 07, 2006 at 23:17:08:

Hi, everyone.

I have a small question to ask of the experienced posters.

Last year I attended a class put on by entrust here in my area about investing in your IRA. I set myself up with one and my 2 children with a “Coverdale IRA”.

The idea behind the coverdale is that it can be used for education expenses. Not just college but PRIVATE school and college. So my thoughts were that since my children are in a good private school I would partner (not loan money to which is against the rules) with my daughters IRA where we split percentage wise the expenses/profit and cashflow.

I funded their accounts with 2.5K each.

Park called me today with a 3/2 s/w 80’ish that they’re willing to “give” me for $500. It needs some plumbing work, electric checked, roof sealed, walls repairs (either panelling or drywall), rotten floorboards replaced, kitchen cabinets need painting and new hardware, sink, hot water heater is missing, carpet, paint and new light fixtures since there aren’t any.

I just rto’d one for 1k down and 675/mo for 36 months. I pay the lot rent of 355 so that leaves a cashflow of 320 a month.

So, my 1st childs school is 175 a month. My youngest is still in preschool which is 75 a week or 300 a month. For a total of 475 a month.

If I were to 55/45 partner a deal with my oldest daughter that would cover her private school cost. Tax free mind you.

My 45% would get me an extra $145 a month in my pocket. Minus taxes of course.

Re: MH Deal Inside Daughters Roth IRA - Posted by will(wa)

Posted by will(wa) on June 08, 2006 at 11:53:20:

Hi John,
I don’t know about the specifics of the Covedale IRA but if you opened it up as Self Directed Type that allows you to direct the Trust company, like Equity Trust, to buy an investment then it’s possible.

However, if you are going to benifit directly from the investment when you say, split profits, then I don’t think that’s allowed. I think you would need to open some LLC and have the IRA invest in that first, then use the LLC to buy the Trailer. Or use 2 SDIRA’s (your daughters and yours) to buy it.

Also Keep in mind for IRA investments that all costs are supposed to be paid by the IRA, not out of your pocket. I think this has to do with what’s called Self Dealing.

There are many good resources that you can find on buy RE in your IRA here, so they may be able to shed more light on this as well. One guy particular, John Merchant, has helped me out a few times. He has a real wealth of information on this topic.

I can say that I have used IRA money to invest in Trailers and think it’s a great way to increase net worth.

On the other topic in your message, IMHO, I think that whoever you RTO’d the Trailer to for 675/mo should be paying thier own lot rent+ all utilities.

Disclaimer: I’m not an attorney and you should do more due diligence than just listening to a guy on a message board.